Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Bob Glasspiegel - Langen McAlenney
Bob Glasspiegel - Langen McAlenney
How big is the equity index portfolio that you’re liquidating today and I assume you’re repositioning given that you’re saying you’re increasing your commitment to equities?
Mark Cummins
We’re going to sell a big part of that portfolio it’s about $110 million at the end of September so it’s probably going to be, we’re just going to be selling the loss lots.
Bob Glasspiegel - Langen McAlenney
Some of the $110 million is down 17% or so.
Mark Cummins
It’s down about actually 9% in the quarter, another $10 million on top of that. When we execute that program depending on when exactly we do it if the markets stay at these levels we will be taking some realized losses in the fourth quarter. At this juncture as we just commented 9% is about $10 million. It’s a good part of that $110 million it might be 80% to 90% of it depending when we execute.
Bob Glasspiegel - Langen McAlenney
You said you’re repositioning because you’re going to increase equities.
Mark Cummins
We’re going to take the tax losses and reposition that portfolio but also increase our total exposure to equities. At the end of the day we’re going to be increasing by $25 million.
Bob Glasspiegel - Langen McAlenney
Are you going to actively manage it or do you have to wait 31 days?
Mark Cummins
We’re going to have to manage through that wash sell period. Our intent is to try to move into another product so we stay fully invested. We’re going to stay in index funds.
Bob Glasspiegel - Langen McAlenney
Could you give us the reserve development by line for the quarter?
Bob Whitlock
For personal lines in total for the quarter is 1.2 points and that breaks down into auto at 7.2 points and homeowners at 0.7 points. Commercial total for the quarter is 3.4 points most of that coming from commercial auto at about 11 points and the other lines are about flat. Overall its 3 points for quarter.
Bob Glasspiegel - Langen McAlenney
Three points favorable?
Bob Whitlock
Yes.
Bob Glasspiegel - Langen McAlenney
There’s been a lot of stress to the system as you say while you dodge bullets many of your competitors did. Most of the managements on the calls are giving a crystal ball what they think the implications are going to be to ’09. I would characterize your company’s commentary both Michael and Bob as being sober, soft cycle strategy in through it. Some of your competitors have been a little bit more optimistic on what the environmental changes imply to the company. Is that a correct characterization that you’re in soft market strategy and not expecting any change for the foreseeable future?
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